Beating the place and show pools

William T. Ziemba

Chapter 6 in Exotic Betting at the Racetrack, 2019, pp 71-94 from World Scientific Publishing Co. Pte. Ltd.

Abstract: Most bettors do not like to wager to place or show. They have been conditioned by a countless series of handicapping books pointing out that true handicappers bet to win not to place or show. Indeed the thrill and bragging rights associated with winning on an 8-1 shot are much greater than in the collection of $3.20 or $2.80 on a favorite to place or show. The feeling is that the payoffs are too small for the risks involved. For example, if you are collecting $3 payoffs you must win two-thirds of your bets just to break even. Breakage also is very heavy for place and especially for show bets. A horse that should pay $2.79 will pay only $2.60 with 10¢ breakage. This takes away about a fourth of the profits. These are all good reasons to be wary of place and show bets. However, it is possible to consistently win by betting on place and show wagers. The key, as for all of our suggested Dr. Z wagers in this book, is: 1) to know how to evaluate the worth of a bet; and 2) when the bet is such that you have a substantial edge, say of the order of 10% or more, then you wager. The size of your wager should be based on a good money management system such as the Kelly criterion which we recommend…

Keywords: Efficient; Inefficient; Racetrack; Betting; Market; Exotic Betting; Race; Handicapping; Strategies (search for similar items in EconPapers)
JEL-codes: A1 C1 L83 (search for similar items in EconPapers)
Date: 2019
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